The minority owners of Nova Scotia, Canada-based recirculating aquaculture system (RAS) company Sustainable Blue have requested the company be placed into receivership.
"An application for receivership has been filed. Beyond that, I can’t comment further at this stage as the matter is before the court," Sustainable Blue CEO Kirk Havercroft said.
The failure of its aquaculture systems due to filtration problems in November 2023 resulted in the loss of 100,000 Atlantic salmon – or roughly 20 percent of its fish – which cost the company as much as CAD 5 million (USD 3.7 million, EUR 3.4 million). Havercroft told SeafoodSource in December then the company was still bullish on the company’s future prospects.
According to All Nova Scotia, the loss of the salmon eliminated the company’s expected revenue from 28 November 2023 through 31 July 2024. Forecasts from the company indicated it needed as much as CAD 12 million (USD 8.7 million, EUR 8.2 million) to support the growth of the salmon that hadn’t been affected by the mortality event – which Havercroft told SeafoodSource was related to a structural failure rather than a “failure within a RAS system.”
To help fill that gap, minority shareholders Thane Stevens and Jim Lawley gave loans to Sustainable Blue amounting to CAD 2.3 million (USD 1.7 million, EUR 1.5 million), but according to the court filings the loans were not a “sustainable long-term solution,” All Nova Scotia reported.
The company’s financial matters took a turn for the worse when loans that Sustainable Blue signed in June 2023 with the Bank of Nova Scotia for CAD 17.5 million (USD 12.9 million, EUR 11.9 million) and CAD 4 million (USD 2.9 million, EUR 2.7 million) matured on 8 March. The company put its 52.9-acre property, assessed for taxation at CAD 10.9 million (USD 8 million, EUR 7.4 million), up as collateral for those loans.
To stave off bankruptcy, Stevens and Lawley reached an agreement with the bank to acquire the company’s debt, allowing Sustainable Blue to maintain its operations while it looked for funding. The company was then registered as 4595756 Nova Scotia Ltd. on 8 March, with Stevens and Lawley as its directors.
On 12 March, the newly formed company, which was expected to have advanced CAD 1.5 million (USD 1.1 million, EUR 1 million) by the end of March, called the loans, which total over CAD 21.5 million (USD 15.9 million, EUR 14.7 million) – a sum that the court filings indicate the companies have no prospect of paying. As a result of the financial trouble the newly formed 4595756 Nova Scotia Ltd. filed an application with the Nova Scotia Supreme Court seeking to appoint Deloitte Restructuring as the receiver over Sustainable Blue, TCAS Holdings, Sustainable Fish Farming (Canada), and TCAS IP Inc. – collectively called the SFFC Group, according to All Nova Scotia.
The receivership filing aims to initiate a sales and solicitation process with Deloitte as receiver, to restructure the ownership and the business of the group. The “SFFC Group” intends to be a stalking horse bidder during the sales and investment solicitation process, All Nova Scotia reported.
The potential restructuring of the company comes amid Sustainable Blue’s partnership with the U.S. state of Washington. Washington Commissioner of Public Lands Hilary Franz – who issued an executive order banning all commercial net pen aquaculture in the state in November 2022 – signed a partnership agreement with the company in April 2023. Franz has been an outspoken critic of ocean aquaculture, and appeared as a guest at the premiere of an anti-salmon farming film released by outdoor clothing and gear company Patagonia in Reykjavík, Iceland.
Patagonia Founder Yvon Chouinard, a critic of aquaculture, is also one of the high-profile investors in Sustainable Blue. The largest investor in Sustainable Blue, according to all Nova Scotia, is a Saudi Arabian “investment club” based in the U.K. called Bayt Al Qoot UK, Ltd.
